ROME — You know you're a troubled airline when even Aeroflot refuses to buy you.
Italy's national air carrier, Alitalia, spent much of 2007 searching unsuccessfully for a buyer. The airline is heavily in debt, loses about $1.6 million a day, is plagued by strikes and is saddled with an aging, fuel-guzzling fleet.
One suitor after another, including Aeroflot, dropped out of bidding last summer for the Italian government's 49.9% controlling stake of Alitalia. An executive from discount carrier Ryanair said he wouldn't take Alitalia if it were handed to him on a silver platter.
Thusly spurned, Alitalia executives and the government revamped their proposal, streamlined a "survival plan" and are again looking for rescue.
A new deal may now fly. Exclusive negotiations are starting with Air France-KLM, the world's largest airline by revenue. The Franco-Dutch company has eight weeks to decide whether to make a binding offer for Alitalia.
"This is the best prospect for saving the air carrier," Italian Finance Minister Tommaso Padoa-Schioppa said.
Alitalia Chief Executive Maurizio Prato said he hoped a final deal would be struck quickly because the airline "is on its last legs."
"There is no more time for other attempts," he said.
The government of Prime Minister Romano Prodi chose to enter the talks with Air France-KLM after debate over whether the national carrier should remain in Italian hands.
Alitalia's problems are deep-rooted and structural. In many ways, the carrier is a symbol of the basic flaws in Italy's stagnant economy, held back by outdated business practices, the inability to compete and a failure to modernize. Labor unions are very powerful and the most senior managers are political appointees.
The airline travel market in and out of Italy is strong and has been expanding -- hence Air France's interest. But Alitalia has managed to steadily lose its market share, in part because of fast-growing, low-budget carriers but also because of its failure to provide good service and competitive fares, analysts say.
Alitalia's share of lucrative international flights to and from Italy, as measured by passenger seats sold, fell from 32% to 26% in the last two years, even as the overall volume increased nearly 20%.
Passengers tell tales of bathrooms that don't work (even in business class) and of cabins with equipment that is falling apart. Strikes a couple of times a year have forced the cancellation of hundreds of flights.
